investsmart professionally investor guide

www.investsmart.com.au1300 880 160

Investor Guide

Capped fees Comprehensive reporting A trusted team of experts

InvestSMART Professionally Managed account (PMA)

Investor Guide – Professionally Managed Account 2

Three simple steps to start investing 1. Open a Professionally Managed Account (PMA)A PMA is an investment platform that puts you in control. Setup your

account online, choose your investment type from individual to company or

SMSF and fund it when ready.

2. Pick your investment portfolio

• Choose to invest in one or many of our professionally managed

investment portfolios

• Enjoy a choice of diversified portfolios plus asset class specific portfolios

such as international shares and property & infrastructure.

• Spread your investment over any number of portfolios to find the right

balance.

3. Let us do the workWe will manage your portfolio and rebalance your investments when

needed, so your portfolio continues to meet the objective of each portfolio.

We'll also keep you up to date with the performance of your investments and

provide all the information you need to make tax time easy.

It lets you get on with life, while your investments work hard to achieve your

goals.

Unique to InvestSMART, our fees start from $99 p.a. and are capped at $451 p.a.

for investments over $82,000.

Capped fees


Our Story20+ years in the making

Three simple steps to start investing

Founded in 1999, InvestSMART is an online financial advisor built for people who refuse to

pay fees for underwhelming performance. People who demand better. People like you. We

believe everyone should have the confidence to control their financial future and it shouldn't

be hard or expensive to do so. At the heart of everything we do, our purpose is to make

investing easy, accessible, and affordable for everyone.

Taking care of your money is a serious responsibility, which is why InvestSMART's

Investment Committee and Board are run by some of Australia's most respected and best-

known investment experts. It is also why many of our staff, friends and family invest with us.

Chances are, you'll recognise some familiar faces, including InvestSMART Chairman and

well-known money expert Paul Clitheroe, as well as money commentator and independent

InvestSMART director Effie Zahos. They're joined by Alan Kohler, one of Australia's most

experienced business commentators and a regular finance presenter on the ABC News.

Each of our experts is committed to making investing easy and affordable with our wide

choice of investment portfolios plus capped fees that help you grow returns – not your fees.

The team behind your investments

Paul Clitheroe, AMChairman

B.A. (UNSW), SF Fin, CFP

Ron HodgeManaging DirectorB.Com B.Econ SF FIN Msc.

Info Tech GAICD

Effie ZahosNon-Executive Director

B.Econ

Catherine TeoGeneral Counsel

B.Com, LLB (UNSW)

Alan Kohler, AMEditor-in-Chief

Evan LucasChief Market Strategist

M.Fin Dip. FS (FP)

Nathan BellPortfolio ManagerCFA B.Econ Grad Dip Fin

Alastair DavidsonHead of Funds Management

B Ec (Hons), CA


Professionally Managed AccountInvesting doesn't have to be complex

The InvestSMART Professionally Managed Account (PMA) is an all-in-one investment platform enabling you to invest your money in one or more portfolios including full execution, management, and tax reporting. It is a simple, hassle-free way to reach your financial goals sooner – and our low capped fees mean more of your money goes towards growing your investment.

There's an investment account to suit your needs

Company

Investment account

for people who

want to invest as a

company.

Individual

Investment account

for people who want

to invest under their

own name.

Joint

Investment account

for two individuals,

such as a couple,

looking to invest

together.

Family Trust

Investment account

for a family trust

where the individuals

are trustee.

Family Corporate

Investment account

for a family trust with

a corporate trustee.


SimplicityLife is complicated enough! We make investing easy. Setup your account online, choose your investment type from individual to company or SMSF and fund it when ready. We deal with all the paperwork.

Investment ChoiceInvest your money in one or more of the investment options to find your right investment balance. Enjoy easy online admin such as setting up ongoing contributions and withdrawals.

Direct ownership An InvestSMART PMA gives you direct ownership of the underlying listed securities. That is important because the securities are held in your name under your own Holder Identification Number (HIN), always making you the legal owner of your investments.

Capped fees – unique to InvestSMARTOver time, the compounding effect of fees can erode the value of your investments (see Why Fees Matter, page 5). That's why our capped fees – an Australian first, work in your favour, helping you grow your money faster. Pay as little as $99 p.a. or a maximum of $451 p.a. if you invest over $82,000.

That's right, no matter if you are investing $100,000 or $10 million, you pay no more than $451 p.a. Our capped fees apply over your entire account even if you invest in multiple portfolios. One fee, one account across multiple portfolios - never pay InvestSMART more than $451 p.a.

TransparencyYour online account lets you track performance, fees and individual security holdings 24/7. Plus, read our monthly fund manager updates explaining the performance and reasons for any changes to each portfolio.

Full tax reportingInvestSMART takes the hard work out of tax time. Our comprehensive tax reports give you all the information you need to make tax time a breeze.

Here's how a PMA can help you achieve your financial goals

More investment accounts

SMSF Individual

Investment account

for a SMSF where

the individuals are

trustees.

SMSF Corporate

Investment account

for a SMSF with a

company as trustees

with the individual/s

as director/s.

Individual Trustees for a Child

Investment account for people who

want to invest as an individual trustee

for a child.

Joint Trustees for a Child

Investment account for people

who want to invest as trustees for

a child.


On the basis that “you get what you pay for”, advisers

and fund managers justify high fees with the promise

of higher-than-average returns. But independent

research shows that promise is rarely met. Over the

long term, most fund managers underperform by the

amount of their fees.

Many investors are paying for outperformance and

getting the opposite. The impact on their nest egg is

huge. The money lost to fees, and the corresponding

loss of the benefits of compounding, ends up in the

pockets of advisers and fund managers.

Over the 30 years to June 2021 the annual return

from Australian shares was 9.2%. Had you invested

$100,000 at the start of that period and paid a fee

of 1.5% to achieve that return, you'd have $896,508

at the end of it. If you paid only 0.5% you'd have

$1,207,807. Small number; big difference.

And the higher the fee you pay, the bigger the

difference it makes. In most cases, fees rather than

returns will make the biggest difference to the value

of your investments over time. That's something the

finance industry prefers to keep quiet.

Performance on $100,000A comparison of fees over 10, 20 and 30 years

$1,165,534

$851,683

$409,977$507,995

$197,352$221,408

0.5% 0.5% 0.5%1.5% 1.5% 1.5%Ongoing feesTimeframe 10 years 20 years 30 years

$24,056 or 11% lost to fees



Assumptions: Initial Investment Amount: $100,000; Upfront fees deducted from initial investment amount; Investment earnings: 9.2% p.a.

Source: ASIC’s MoneySmart managed funds fee calculator

Why Fees MatterDon't underestimate the impact of fees

Lowering your fees rather than paying for outperformance that probably won't materialise means you'll enjoy a far more

prosperous retirement.

Focus on

https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/managed-funds-fee-calculator

7Investor Guide – Professionally Managed Account

Our investment portfolios Choice, diversity, and performance

Our readymade portfolios give you the benefit of choice plus instant diversity.

Each portfolio has been expertly blended with a mix of Exchange Traded

Funds (ETFs) and some specific ASX securities to minimise risk and maximise

returns in line with the portfolio's investment objective.

Use one of our diversified portfolios as your main investment or invest over

many of our single asset class portfolios for even more flexibility.

Benefits of our investment portfolios:

Professional portfolio managementWe only pick the best exchange traded funds and specific ASX securities for

each investment portfolio with daily monitoring and administration to make

sure they continue to meet the investment objective. Exchange traded fund

selection is based on our unique proprietary system designed to find the

best funds based on several factors including liquidity, tracking error and

management fees.

Consistent performanceOur portfolios consistently track the relevant market benchmark – and

consistently beat most of our peers. How? Our experts don't take unnecessary

risks to try and outperform the market, they simply aim to track the market.

Independent research shows close to 90% of fund managers that try to beat

investment markets fail to do so on a consistent basis.

Sure, a fund manager may outperform the market in one or two years. But

only the tiniest percentage achieve this over five years. Even fewer manage

to outperform the market consistently over the long term. In the meantime,

investors are charged high fees – money that comes straight out of your

wealth regardless of underperformance.

In short, by tracking the market, InvestSMART not only achieves strong,

consistent long-term returns, we are also able to give you the savings of our

capped fees and low costs.

Low-cost brokerage and ETF feesApart from our platform fees, Finclear, our external broker, charges brokerage

on each security you buy and sell within each portfolio. Low-cost brokerage is

the greater of $4.95 per trade or 0.099% of the value of the trades to buy (or

sell) the securities within your portfolio.

Indirect costs are charged within each Exchange Traded Funds (ETF) from

0.09% - 0.30% p.a. .

Paul Clitheroe AO InvestSMART Chairman

7


Balanced InvestSMART’s Balanced Portfolio is a simple way to get exposure across many different markets. The potential for capital growth over 3 to 5 years lets your portfolio do more of the hard yards working towards your goals.

Objective: Invest in a portfolio of 5-15 exchange traded funds (ETFs), that provide a more even mix of regular income plus the potential for capital growth through equities, property and infrastructure assets.

Risk: Medium

Suitable goals:

• Looking for a balanced allocation towards defensive

and growth assets

• Saving for a major purchase or school education

expenses

• Winding down from full-time work to retirement

• Funding a semi-retired lifestyle where income is less

important

Diversified Portfolios Our range of diversified portfolios focus on investing over all asset classes in different proportions to provide different risk vs return profiles for each portfolio.

Conservative

Our Conservative Portfolio is the ideal option if you have short term goals (2+ years) and your focus is on protecting capital while earning higher return than cash.

Objective: Invest in a portfolio of 5-15 exchange traded funds (ETFs), with an emphasis on investments like bonds and cash that deliver regular, reliable income still with some exposure to equities to help beat inflation.

Risk: Low to Medium

Suitable goals

• Looking for a defensive allocation with lower

exposure to growth assets

• Saving for a first home, holiday or car

• Generating retirement income



High Growth The name says it all! Our High Growth Portfolio is all about helping you build long term wealth and achieve goals with a timeframe of 7-years-plus to ride out the ups and down of markets.

Objective: Invest in a portfolio of 5-15 exchange traded funds (ETFs), with a real focus on growth assets (shares and property) though nicely rounded out with exposure to a little bit of fixed income investments like bonds and cash.

Risk: High

Suitable goals:

• Looking for the highest allocation to growth assets

• Saving for future retirement

• Building a nest egg for your next-of-kin

• Enjoying retirement with no concerns

Growth The InvestSMART Growth Portfolio is an exciting choice if you're saving for long term goals (5-years-plus) or you want to grow wealth for the future.

Objective: Invest in a portfolio of 5-15 exchange traded funds (ETFs), with more of an emphasis on 'growth' assets like shares and property that have the potential to appreciate in value over time.

Risk: Medium to High

Suitable goals:

• Looking for a high allocation to growth assets

• Growing your retirement nest egg or superannuation

• Saving early for your child's education

• Higher allocation to growth assets

Jim and Deb want to save a $60,000 first home deposit in five

years. By choosing the InvestSMART Balanced Portfolio, starting with

$10,000t and adding $800 per month, they can reach their goal six months

sooner than expected.

Save faster

Investor Guide – Professionally Managed Account 1 0

Single Asset Class PortfoliosOur range of single asset portfolios focus on specific investment markets. They can help you fill diversification gaps in your overall portfolio, complement your current investment approach, for example, adding exposure to international equities to an Australian shared-based portfolio, or allowing you to tailor your PMA to a specific goal.

Australian Equities

InvestSMART's Australian Equities Portfolio is an easy way to get started in the Australian sharemarket without lots of paperwork, or use it to add valuable diversity to your overall portfolio.

Objective: Invest in a portfolio of 1-5 exchange traded funds (ETFs), to diversify risk within Australian shares. Diversification is not only important across asset class but also within each asset class. This way we lower volatility, minimise overall risk, and increase the potential for long term gains.

Suitable goals:

• Diversifying an existing Australian equity portfolio with less than 20 stocks

• Looking for broader exposure to all sectors in the Australian share market

• Long term growth for your nest egg or superannuation

International Equities

The world is a big place, and our International Equities Portfolio lets you access global sharemarkets – something that can be costly as an individual investor. It's an easy, low cost way to invest in some of the world's biggest companies across Europe, Asia and the US.

Objective: Invest in a portfolio of 1-10 exchange traded funds (ETFs), to provide broad exposure to international equities, and across different market sectors and/or regions to lower volatility, minimise overall risk, and increase the potential for long term growth.

Suitable goals:

• Diversifying your investment portfolio that lacks international

equity exposure

• Looking for exposure to more established sectors overseas such as technology and health care

• Long term growth for your nest egg or superannuation

Interest Income

You want to preserve your capital, enjoy predictable income and still earn returns higher than cash. If that sounds like you, the Interest Income Portfolio can tick all the boxes.

Especially designed for investors looking for a stable portfolio with regular income, the mix of Australian and international fixed securities means reliable income with low risk.

Objective: Invest in a portfolio of 1-10 exchange traded funds (ETFs) to provide broad exposure to fixed interest assets, all managed in the one portfolio.

Suitable goals:

• Earning income in retirement

• Looking for exposure to overseas government and corporate bond

markets

• Looking for exposure to a broad range of fixed interest assets


Property & Infrastructure

Like to add bricks and mortar or maybe a tollway or two to your portfolio? Here's the solution. The InvestSMART Diversified Property & Infrastructure Portfolio is a smart way to spread your money across commercial property (Australian and international) as well as infrastructure assets like road, rail and ports that can be hard to access as an individual investor.

Objective: Invest in a portfolio of 1-10 exchange traded funds (ETFs) and specific ASX infrastructure securities, across Australian Real Estate Investment Trusts (A-REITs), plus infrastructure and global property ETFs, all managed in the one portfolio.

Suitable goals:

• Diversifying your investment portfolio that

lacks property exposure

• Looking for exposure to retail and commercial property in Australia and overseas

• Looking for exposure to infrastructure at home and abroad

• Long term growth for your nest egg or

superannuation

Hybrid Income

Hybrid securities combine elements of debt (like bonds) with aspects of shares. Our Hybrid Income Portfolio gives investors the potential to earn a higher return than fixed interest securities though still with a regular income.

Objective: Invest in a portfolio of 5-15 ASX-

listed hybrids that aims to achieve 3% above

the RBA Cash Rate.

Suitable goals:

• Looking for exposure to several hybrids in

one easy to manage portfolio

• Transitioning to retirement with a modest view on risk

• Earning higher returns on your capital than term deposits with slightly more risk


www.investsmart.com.au1300 880 160

IMPORTANT: This information is general financial product advice only and you should consider your own personal objectives, financial situation and needs or seek professional advice before making any investment decision. Product disclosure statements for financial products offered through InvestSMART can be downloaded from this website or obtained by contacting 1300 880 160. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.

Be sure to read our Product Disclosure Statement (PDS) and Investment Menu (IM). Both explain the nitty gritty

of our low cost investment portfolios.

Next, complete your application online. Head to

investsmart.com.au/invest. You'll need some personal ID

including:

• Your bank account details

• Your driver's licence, passport or Medicare card.

Utility bills are also acceptable

• Your tax file number (TFN)

• For SMSFs applications, you'll need your ABN details

• For Trusts applications, you'll need a certified copy of the trust deed

Have a question, need help? Contact us We are people with financial goals too, and we also invest in our

products, so we can help with any questions you may have.

Please get in touch.

Ready to get started?

We’re here to help

[email protected] 1300 880 160

www.investsmart.com.au/help-centre

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